Competitive advantage of information technology?

Question

Competitive advantage of information technology?

Answer 1

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Contemporary firms are making significant investments in information technology to align business strategies, enable innovative functional operations and provide extended enterprise networks. These firms have adopted information technology to foster changes in managing customer relationships, manufacturing, procurement, the supply chain and all other key activities (Agarwal & Sambamurthy 2002; Barua & Mukhopadhyay 2000) and to enhance their competitive capabilities (Sambamurthy et al. 2003). A number of information systems researchers have posited information technology as an important ingredient of innovation development (e.g., Corso & Paolucci 2001; Dewett & Jones 2001; Xu et al. 2005). Firms implement information technology to enhance and/or enlarge the scope of their products and services. As many innovation activities involve adding new services, expanding existing ones and/or improving the service delivery process, the success of an organization hinges on how well it implements its service innovation (Berry et al. 2006) to create new markets.

Good innovation practices help enhance a firm's competitive advantage (e.g., Afuah 1998; Bharadwaj et al. 1993). However, there is little theoretical work on the development of nomological relationships among information technology, service innovation and competitive advantage. Systematic empirical investigations of these relationships are also scarce and no dominant pattern has emerged (Preissl 1999). To address these gaps and advance understanding of information technology adoption and specific service innovation practices, we explored information technology adoption as a coordination mechanism (Dedrick et al. 2003; Galbraith 1973), which has led to changes in innovation-related activities